Operating Margin - SIA Engineering Company Ltd (SGX:S59)

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Price: 3.51 SGD 2.03%

Market Cap: 3.9B SGD

1.7%

Current

-1%

Average

18.8%

Industry

Operating Margin represents how efficiently a company is able to generate profit through its core operations.

Higher ratios are generally better, illustrating the company is efficient in its operations and is good at turning sales into profits.

Operating Margin

1.7%

Operating Profit

24.2m

Revenue

1.4B

Operating Margin Across Competitors

Country	Company	Market Cap	Operating Margin
SG	SIA Engineering Company Ltd SGX:S59	3.9B SGD	2%
ES	Aena SME SA MAD:AENA	35.6B EUR	46%
TH	Airports of Thailand PCL SET:AOT	785.7B THB	38%
FR	Aeroports de Paris SA PAR:ADP	11.2B EUR	18%
IN	GMR Airports Ltd NSE:GMRAIRPORT	1.1T INR	24%
CN	Shanghai International Airport Co Ltd SSE:600009	82.4B CNY	17%
MX	Grupo Aeroportuario del Pacifico SAB de CV BMV:GAPB	204.8B MXN	42%
CH	Flughafen Zuerich AG SIX:FHZN	7.6B CHF	33%
MX	Grupo Aeroportuario del Sureste SAB de CV BMV:ASURB	156.5B MXN	50%
IN	GMR Infrastructure Ltd NSE:GMRINFRA	759.3B INR	24%
DK	Copenhagen Airports A/S CSE:KBHL	50.9B DKK	33%

SIA Engineering Company Ltd
Glance View

Market Cap

3.9B SGD

Industry

Transportation Infrastructure

SIA Engineering Company Ltd., headquartered in Singapore, stands as a vital pillar in the aviation industry, playing the critical role of ensuring airplanes are airworthy, efficient, and ready to soar. Emerging from the shadows of its illustrious parent, Singapore Airlines, SIA Engineering has crafted an identity of its own with a dedicated pursuit of excellence in aircraft maintenance, repair, and overhaul (MRO) services. The company strategically positions itself as a key player in Asia and beyond by leveraging an extensive network that spans through partnerships and joint ventures with major global aviation players. This strategy not only broadens its reach but also elevates its technological capabilities and service offerings to match those of the world's best. Drawing power from its hubs operating across key airports in Asia, the company makes its money through a well-oiled model that focuses on providing comprehensive maintenance solutions. These include line maintenance services, where aircraft are checked and maintained at the gate, and the more in-depth base maintenance that involves thorough overhauls of both the airframes and engines. Additionally, the company taps into the lucrative component and engine support markets, providing specialized expertise and spare parts essential for aircraft operations. Through these intricate operations, SIA Engineering enjoys a steady stream of revenue, firmly grounded on long-term contracts and robust relationships with major airlines. This approach not only secures its financial health but also solidifies its standing as a trusted custodian of aviation safety and reliability.

View S59 Analysis

S59 Intrinsic Value

What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

The AI Assistant may sometimes provide inaccurate information.

Make your own investment decisions or consult a licensed financial advisor.

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SIA Engineering Company Ltd
SGX:S59